Strategizing for success: how to sell your project to your future stakeholders
What’s involved in capital strategy planning in order to be successful?
- Identifying appropriate investors
- Developing your pitch and corporate message
- Conveying the broader benefits of the project to stakeholders
- Realistically evaluating the project’s weaknesses and helping to identify mitigations
- Considering market and sector cyclicality
- Developing a technically sound financial model and business plan
- Providing the tools to attract capital
- Helping with capital planning
- Improving sustainability and being impact positive
- Optimizing your resources
It’s worth discussing key strategies for planning a winning capital strategy and achieve stakeholder satisfaction and project success.
Be ready and consistent
Investors are interested to know your long-term vision. In order to share it convincingly and confidently, you need to prepare. Making sure your corporate message and strategy are polished and ready for delivery will provide you with the best chance to gain the market’s confidence in your organization and your strategy. To build that market confidence, you need to be ready to answer some tough questions. How much funding do you need? How do you plan to use their funding? Where and when do you plan to get the balance of the funding you need? When do you expect to see a return on investment? What are some of the challenges you might face and how are you prepared to face them? Knowing the ins and outs of your project will enable you to craft a solid and consistent narrative, instead of basing your pitch on what you think the investors want to hear–investors usually recognize this type of customized sales pitch, which in turn reduces the potential of having an authentic alignment that’s better for everyone in the long term. You should also expect stakeholders to test your narrative by auditing some of your data, or benchmarking against other studies or projects.
Mitigate risk
Producing a third-party financial model with technically sound input variables and assumptions and a confidential information memorandum that speak to the key risks and opportunities of a project can help mitigate some of these challenges. An impartial, external party will examine strengths, weaknesses, and provide you with honest, constructive criticism and proactive feedback. Investors will see that you’ve done your homework and that you’ve included a diversity of thought in your plan. Further, looking at a diverse range contract structures, such as take-or-pay arrangements, can mitigate the risk of your project losing money. Take-or-pay contracts are particularly common in the infrastructure sector because of the associated large overhead costs. Through this kind of arrangement, however, there’s a written obligation for the contracted users of your infrastructure to pay a pre-determined amount by a certain date or pay a penalty, giving investors a measure of assurance that future cash flows will be there.
Be impact positive
Having an impact is the next consideration. Projects need more than just local stakeholder involvement. To be successful, you need to have a greater message of the benefits of your project. Simply put, strive to be proactive: be impact positive, not just impact neutral, on the environment, society or economic development. How is your project impact positive? What is the transformative power of the project? Even for small projects–what are the broader benefits? Wages, boosting local economy and communities, supporting educational institutions? Cleaner, more reliable energy? These are just some examples. You’ll have to showcase the impact and how you’ll measure that impact.
Impact has a wider implication within the natural resources sector due to its connection to sustainability and its price cyclicality. Weather patterns are changing. People are becoming increasingly conscious about the environment. The world is trying to use cleaner energy. That’s why corporate sustainability has become a critical theme for companies. Firms are becoming more risk-averse and many investors are apprehensive of the natural resources industry due to its perceived environmental impacts. Fortunately, with technology and innovation, we’re able to reduce environmental impacts, reduce waste and emissions, improve employee safety, digitize and electrify entire fleets of haul trucks, and use cleaner energy.
Ask for help
By having access to a team of technical experts across the entire scope and life cycle of a project, including capital strategy planning, you can get advice on how to best develop projects to ride out a down market and still make a profit. It’s okay to ask for help–to bring in experts who are familiar with all the considerations. Their experience can help you navigate the project, evaluate your needs, and find the best strategies for success.
About the author
Ryan Cote
Principal, Advisory, Advisory
Ryan has over fifteen years of experience in the mining and metals, energy, and infrastructure sectors. His experience includes M&A due diligence, valuation, business improvement, strategy, benchmarking, and market research. As a Principal in Hatch’s global head office near Toronto, Canada, he is currently leading a catastrophic risk management program on behalf of a large, global, diversified commodities firm.